Abstract

Using ownership and control data for 905 firm-years, this paper examines the concentration of capital and voting rights in British companies in the second half of the nineteenth century. Both capital and voting rights were diffuse by modern-day standards. This finding implies that ownership was separated from control in the UK much earlier than previous scholars have suggested. It also provides evidence against the law and finance hypothesis, which argues that strong shareholder law is a prerequisite for diffuse ownership. In terms of the determinants of ownership, we find that the secondary trading of shares over time, and the appointment of large boards, were associated with less concentrated ownership. There is also evidence that many early companies made a particular effort to attract small shareholders, by severely limiting the voting rights of large shareholders, and by listing on multiple regional stock markets.